Restaurants take a bite out of lunch prices

Restaurant industry

Lauren Shepherd, Associated Press

Published
4:00 am PDT, Thursday, May 28, 2009

In this photo taken May 21, 2009, Wes Hoover of Mechanicsburg, Pa., bites into his roast beef sub at Quiznos in Mechanicsburg, Pa. Whether sit-down or take-out, restaurant chains are finding the key to persuading people to spring for lunch these days is keeping the tab below $10. (AP Photo/Carolyn Kaster) less

In this photo taken May 21, 2009, Wes Hoover of Mechanicsburg, Pa., bites into his roast beef sub at Quiznos in Mechanicsburg, Pa. Whether sit-down or take-out, restaurant chains are finding the key to ... more

Photo: Carolyn Kaster, AP

Photo: Carolyn Kaster, AP

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In this photo taken May 21, 2009, Wes Hoover of Mechanicsburg, Pa., bites into his roast beef sub at Quiznos in Mechanicsburg, Pa. Whether sit-down or take-out, restaurant chains are finding the key to persuading people to spring for lunch these days is keeping the tab below $10. (AP Photo/Carolyn Kaster) less

In this photo taken May 21, 2009, Wes Hoover of Mechanicsburg, Pa., bites into his roast beef sub at Quiznos in Mechanicsburg, Pa. Whether sit-down or take-out, restaurant chains are finding the key to ... more

Photo: Carolyn Kaster, AP

Restaurants take a bite out of lunch prices

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Whether sit-down or takeout, restaurant chains are finding the key to persuading people to spring for lunch these days is keeping the tab below $10.

"There is no reason why anyone should spend more than $10 for lunch," said Zach Brooks, a stay-at-home dad and blogger who writes about lunch spots in Manhattan.

Restaurants certainly appear to be listening. Many have conducted extensive consumer research to determine the magic price that will draw customers.

Hot sub maker Quiznos, for example, launched a new toasty sandwich in March called the Torpedo at $4 after testing it with focus groups at $4, $4.29 and $4.59 to figure out what consumers were willing to pay.

"$4 really went over the cliff," said Chief Executive Rick Schaden. "If I can get fed a good-size portion for $4 and that's my lunch, they're highly interested."

Schaden said Quiznos' overall sales jumped by double-digits and traffic is up more than 30 percent this spring. Quiznos sells a variety of toasted sub sandwiches. In January, the company cut its prices on 37 of its menu items, taking 20 of its subs under $5.

For chains without waiter service, the $5 mark seems to generate the most interest, said David Urban, a professor of marketing at Virginia Commonwealth University.

"There seems to be something about that $5 price range, give or take a dollar or so, that seems to sing with consumers as sort of a threshold point in their minds about whether it's worth it to go out or not," Urban said.

T.G.I. Friday's is pursuing the parsimonious with nine new salads and sandwiches in April for $5 - a move Andrew Jordan, senior vice president of marketing, said has boosted the company's lunch business. The regular prices for the nine salads and sandwiches range from $6 to $11 and will go back into effect June 1. The company is also offering "endless" refills on soup, salad, breadsticks and drinks during lunch for $6.99.

Urban said fast-casual and even sit-down chains are stealing a strategy that has long worked well for fast-food chains. McDonald's Corp., the fast-food industry leader, has offered $1 meals and value deals for years. And its same-store sales, or sales at stores open at least a year, rose 4.3 percent in the three months ending in late March, while those at most other restaurants dropped sharply.

Lunch has been an especially difficult meal for most chains because it is one of the easiest for customers to cut out or replace with a brown bag from home.

Hudson Riehle, senior vice president of research at the National Restaurant Association, said lunch traffic goes down whenever the number of employed consumers drops. Those without jobs have less need for convenient lunch options and have less cash to spend.

Urban and Riehle both said most restaurants' lunch prices aren't likely to go back up soon.

"It's actually a very good time for consumers to get great deals and restaurant meals," Riehle said.